VC Headline secures 30% stake in Brazil’s largest startup acquisition in 5 years

VC Headline secures 30% stake in Brazil's largest startup acquisition in 5 years

Pismo’s Acquisition: A Game-Changer in Latin America’s Tech Ecosystem

In a recent meeting, Headline’s venture capitalist, Kamran Ansari, revealed how a team of passionate individuals came together to build Pismo, a company that would help traditional banks stay competitive amidst the rise of new digital banks. Engineer Daniela Binatti, who believed that rapid product turnaround times at newer banks would threaten incumbents, successfully convinced her former boss, Ricardo Josua, to pause his retirement plans and embark on this new venture. Binatti’s husband, Marcelo Parise, and sister, Juliana Binatti, later joined the team as well, making it a formidable group.

Pismo quickly emerged as the shining star in Headline’s Latin American portfolio. Last month, Visa announced its plan to acquire Pismo for a remarkable $1 billion, making it the largest M&A deal for a Brazilian startup since Didi Chuxing’s acquisition of rideshare company 99 five years ago. This acquisition also more than doubled Pismo’s valuation from its previous Series B round, reaching a whopping $410 million. Notable investors such as SoftBank and Accel had already come on board during the Series B round. At the time of the acquisition announcement, Pismo boasted an impressive 80 million accounts and processed $40 billion in transaction volumes per year. The company had also recently signed a commercial agreement with Citibank.

For Headline, this deal represents a significant milestone. The venture capital firm had gradually accumulated a 30% stake in Pismo through three funding rounds. Once the Visa deal is finalized, Headline’s exit across multiple funds, including its local-focused fund Headline Brazil, is estimated to reach approximately $300 million. This achievement is a testament to Headline’s founder, Kamran Ansari, who had previously made a name for himself after selling his company BuscaPé, a price comparison website, for $374 million in 2009 – one of Brazil’s largest exits.

Pismo’s success also comes at a crucial time for Latin America’s tech ecosystem, which has been experiencing a decline in funding figures. Prior to the Pismo deal, there had been no acquisitions above $100 million in Latin America this year. Both early-stage and growth-stage deals have been significantly impacted, with a 71% decrease in the number of deals at the end of the first quarter compared to the previous year.

Kamran Ansari, who experienced the challenges of the post-Dot Com period between 2001 and 2009, describes it as a “nuclear winter” for Latin America. Exits dried up, and funding became scarce. However, the market eventually recovered around 2010 with the entrance of growth-stage funds like SoftBank and Tiger Global, which injected substantial capital into the region. Unfortunately, these same firms have recently scaled back their investments in Latin America.

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While growth-stage companies are adapting their business models or relying on existing cash reserves to survive, early-stage valuations have dropped significantly in the past couple of years. There are now fewer active funds with fresh capital available to invest in companies. Despite these challenges, Headline’s Brazilian fund has received nearly 2,500 pitch decks in the last 10 months, indicating that founders are still actively seeking funding.

In other notable news from the venture capital world, Sequoia recently laid off seven members of its talent team, representing one-third of the individuals dedicated to helping portfolio companies with recruiting. This event comes shortly after five investors left the firm, although it is unrelated to their departures. Meanwhile, Benchmark announced the addition of Victor Lazarte, the former CEO of Brazilian gaming startup Wildlife Studios, as a new general partner. With Lazarte on board, Benchmark now has six GPs who share an equal cut of the firm’s profits.

Lastly, Andreessen Horowitz appointed Anjney Midha, formerly the vice president of platform ecosystem at Discord, as a general partner to oversee its A.I. efforts. Midha, an angel investor in A.I. companies prior to joining Andreessen Horowitz, brings valuable expertise to the firm.

It is clear that Pismo’s acquisition and Headline’s successful exit have injected optimism into Latin America’s tech ecosystem. While challenges persist, founders and venture capitalists continue to seek innovative solutions and invest in potential unicorns. The journey continues, and significant opportunities are waiting to be discovered.

Jessica Mathews, Twitter: @jessicakmathews, Email: [email protected]

Jackson Fordyce curated the deals section of today’s newsletter.